EXIM Bank is selling the ground floor of the apartment complex, The Dorchester, which was its home for years but is now rented to another state body, Jamaica Social Investment Fund.

The sale proceeds will be added to the bank's $6.7 billion pool of lending funds. It is also to draw down, anytime now, the remaining $350 million of a $1-billion commitment from the Tourism Enhancement Fund, TEF.

Bell, who has headed EXIM Bank since 2010, is also banking on the spirited lobby efforts of Industry and Commerce Minister Audley Shaw to get about $4.5 billion in dormant funds, lying idle in banks and near-banks,. redirected to EXIM by the end of the fiscal year next March.

In the interim, the bank is to receive what its managing director describes as "small amounts" of funds originally allotted to the defunct community-based microlending outfit MIDA and similar unutilised allocations.

In an interview with the Financial Gleaner, Bell admits that she is impatient for the high levels of growth, which $100 billion in lending by her institution over the past 20 years, coupled with financing from other state lending sources such as the Development Bank of Jamaica, DBJ, and commercial lending sources, including banks and credit unions, have so far been unable to unlock.

She and her board, headed by baking tycoon Gary 'Butch' Hendrickson, are convinced that this growth must be driven by small and medium enterprises. That is why these businesses make up 70 per cent of EXIM Bank's $8.62-billion loan portfolio and are expected to be the recipients of the unclaimed funds largesse.

Bell, who worked for nine years with Jamaica's trade and promotions agency, Jampro, believes funding to EXIM has never been sufficient to make a big enough dent in the financing requirements of Jamaica's productive sector. She points to Jamaica's estimated 40 per cent credit-to-GDP ratio, compared to levels of more than 190 per cent in the United States, as emblematic of the financing gap.

Noting that finance has long been recognised as one of the impediments to growth in the Jamaican economy and economies around the world, she offered that the inability of the Government of Jamaica to adequately fund the bank's on-lending mandate, is exacerbated by the existing agreement with the International Monetary Fund that puts a lid on government borrowing.

Almost the entire loan utilisation of $8.6 billion is funded by the Jamaican Government, with a small line from the Banco Latinoamericano de Exportaciones, or Bladex.

"The pool is not growing," Bell said. "A financial institution has to have money to lend. It's as simple as that."

DEMAND FOR FUNDS

The TEF's $1 billion, of which EXIM Bank has drawn down $650 million, is expected to be disbursed to small and medium tourism and related businesses. The entire facility, which is loaned at 4.5 per cent, is expected to be disbursed by next March. Bells notes that there is a high level of demand for the funds, constrained only by the ability of the companies to meet the borrowing requirements. "We need to prepare companies to be creditable," she said.

A lack of appreciation for the role of development banking in stimulating economic growth is part of Bell's disappointment. She sees a special role for EXIM as the only government institution that provides direct lending to the productive sector, a role it took on in the 1990s.

She recalls that the institution was created 32 years ago by then Finance Minister and Prime Minister Edward Seaga with the objectives of increasing exports, creating favourable balance of payments and driving economic growth. It grew out of the Jamaica Export Credit Insurance Company, then aligned to the central bank. Now, she says the bank takes a holistic view of exports to include providing appropriate financial solutions for the entire productive sector.

"By building the inputs, you are ultimately going to be able to build the exports," she explained.

The development banker, with international finance and marketing training, is only too aware that difficulty accessing credit from the commercial banks is the bane of most small and medium businesses, even while these institutions are awash with cash and looking for suitable loan takers. Nowhere is this more obvious than in the creative industries, she says.

"To this day, Bob Marley could not get a loan in the financial sector. All our creative industries are underfinanced. Services make up some 75 per cent of the economy, (but) we still don't know how to finance services," she said.

Noting that the reluctance to finance some businesses is a result of banking regulations which require that banks make full provision for what are considered risky loans, Bell said emerging business activities are disadvantaged by these requirements. This makes the role of development banking more critical, she said.

EMERGING SECTORS NEED SUPPORT

"Can I say cannabis? Can I say cannabis again? More needs to be done in creating opportunities by the Government proactively funding and supporting emerging sectors, or sectors where we have a competitive advantage," the development banker said.

This recognition does not mean EXIM is ready to finance the emerging cannabis business just yet, but Bell is readying the bank to be able to fund emerging sectors supported by regulations and government policy.

The EXIM Bank chief credits the boards over successive administrations for preserving the integrity and independence of the bank's operations as it modernises and seeks to fulfil its mandate with greater efficiency. She trumpets a bad-debt ratio of under three per cent and 12 per cent in nonperforming loans as a bit higher than desirable, but in keeping with development banking levels.

These, she says, are dominated by a few large old loans. "EXIM takes an approach that is long suffering to give them every opportunity to resuscitate themselves. Many have been able to recover even after going down to the bone," she said.

Short-term revolving lines of credit for working capital account for 70 per cent of the portfolio, while medium-term loans for capital improvement, equipment and retooling make up 30 per cent. Loan ceilings are subject to the bank's liquidity and are, on average, around $5 million.

EXIM's loan sale that ended October 31 is reported to have generated demand of more than $4 billion, but applications were made for $1 billion of credit. But so far approvals and disbursements are moving slowly, at $351.7 million and $2.5 million, respectively, as the bank continues to assess the applications.

The EXIM head is unapologetic about the bank's focus on the SME sector and its lion's share of 98 per cent of loans during her tenure. Just two per cent of lending goes to large firms, although many mega companies in Jamaica are said to have grown with EXIM loans.

EXIM's SME clients are mainly into agro-processing, mining, manufacturing, services, Information communications technology, and tourism and its linkage industries. Large borrowers are all in manufacturing.

While not focused on profit-making, the bank is required to be sustainable and posts profits in the region of $40 million per year, from which a dividend is normally taken by the parent ministry. Higher levels of profits are forecast for next year and the bulk of it will be reinvested into lending, Bell said. "Our job is not to make profits. Our job is to have impact," she asserted.

The bulk of EXIM's funds - 98 per cent - are lent directly to clients. On-lending to financial intermediaries is done as the need arises.

As interest rates trend down, EXIM Bank will lose its low-rate advantage. In that scenario, as Bell acknowledges, flexibility of loan structures, including the use of direct guarantees and leniency with collateral requirements, will become more important.